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Tuesday, January 03, 2017

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Tuesday Morning Eye-Opener: Going For It


by Kevin Coupe

One of the bigger retail stories that broke during the month of December was when Amazon said that sometime soon it will open a convenience store in Seattle that will not have any checkouts. Using technology originally developed for self-driving cars, Amazon Go will allow people to enter using an specific mobile app, p[ick up any product they want, and leave ... with all the items they take with them charged to their Amazon accounts.

Pretty cool. As was the video released by Amazon on YouTube. Which you can see here.

But I like it when the competition gets a little cheeky. Which is exactly what happened in pretty short order when French retailer Monoprix released a video on YouTube that closely mimicked the Amazon video ... suggesting that it had developed a way for customers to avoid checkout lines a decade before Amazon Go came to fruition.

Monoprix makes the point that its vision has nothing to do with apps and mobile phones, and everything to do with understanding its customers ands applying "human technology."

The video is above, and worth watching. Monoprix makes it clear that if you want to compete with Amazon, sometimes you have to come at the problem from an entirely different direction ... and that it is critical to have different and defining strengths. (It also helps to have a sense of humor, which the Monoprix folks clearly have, and an ability to execute speedily. No wasted time in crafting this response.)

That's a lesson worth learning. And an Eye-Opener worth watching.

Businesses Look To M&A For Inspiration, Innovation

The Wall Street Journal reports on how traditional businesses in the US increasingly are looking to Silicon Valley for both inspiration and innovation.

The Journal writes that "for much of the past half-century, U.S. corporations in industries from manufacturing to retail generally eschewed Silicon Valley startups, instead choosing to build their own new products or buy established companies.

"But a combination of factors - fear of seeing business disrupted, struggles to find growth, changes that require new skills - are leading more of these companies to hunt for tech deals. In recent months, a burst of old-line companies have swallowed tech upstarts, including Wal-Mart Stores Inc. ’s $3.3 billion purchase of web-discount retailer Jet.com Inc., General Motors Co. ’s more than $1 billion acquisition of self-driving tech company Cruise Automation and Unilever PLC’s $1 billion purchase of online razor seller Dollar Shave Club."

And, the story says, "Venture-capital investors and analysts expect a flurry of deals in 2017, particularly given that funding is harder to come by in the private and public markets."

KC's View: Of course, gaining inspiration and innovation is not just about writing checks. One of the things that companies have to do is be willing to absorb culture and lessons that will make them better - mergers and acquisitions only really make sense if at the end both entities are more effective and efficient as a result.

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Industry Drumbeat

From the National Grocers Association...

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Fired Whole Foods Managers Fire Back With Class Action Lawsuit

Call it Whole Outrage.

It was just a couple of weeks ago that it was reported here and elsewhere that Whole Foods had fired nine store managers in its mid-Atlantic region "for manipulating a bonus program to their benefit." The company said that the managers "engaged in a policy infraction that allowed the managers to benefit from a profit-sharing program at the expense of store employees."

Now, those same managers are firing back with a class action lawsuit - seeking $25 million apiece in damages - that says they actually were fired by the company because they "blew the whistle" on Whole Foods' practice of not paying earned bonuses to employees. The Associated Press writes that the lawsuit characterizes Whole Foods' behavior as "systemic age theft," and that the firings took place after a "sham internal investigation." The suit also says that Whole Foods defamed the managers by accusing them of stealing from store employees.

KC's View: This is a fascinating story, and I'm really looking forward to how it all plays out in the courts (and the media). I do think that if Whole Foods is not 100 percent correct in how it has fired these managers, and if there is any accuracy about the claims being made, it will take an enormous hit to its reputation.

I'm not prejudging the case. I'm just saying that a class action lawsuit seems like a pretty risky move if the managers are guilty as charged.

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Corporate Drumbeat

From ReposiTrak...



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For Some, Resistance To The Amazon Ecosystem Isn't Futile

The Wall Street Journal the other day reports that despite Amazon's apparent momentum toward world domination, 17 percent of US primary household shoppers say they never shop on Amazon. And, "while the percentage has steadily declined over the past five years, roughly 22 million American households didn’t use the retailer this year."

The Amazon holdouts, the Journal writes, "tend to be older than U.S. shoppers overall, with an average age of 57 versus 49, respectively, according to Kantar, and they tend to earn less—$45,700 in annual income, compared with $62,800 among all shoppers. They are less likely to have or live with children."

The story concedes that this group is "part of a shrinking minority. Amazon’s global e-commerce sales are greater than the combined e-commerce sales of the next 20 U.S. retailers, according to eMarketer. In addition, Amazon’s revenue is forecast to surge 28% this year to $137 billion, according to analysts surveyed by Thomson Reuters."

The Journal emphasizes that the holdouts are hardly Luddites. In some cases, there is "fear and mistrust" about doing business on the internet, but there also are folks who simply are resistant to Amazon's size and intentions, and others who just prefer the act of shopping in physical stores. In other words, some motivations are logistical and others are preferential ... but they are all about remaining outsider the ecosystem.

KC's View: There are about 125 million US households. Just 22 million of them didn't use Amazon this year.

I suspect that Jeff Bezos probably is pretty okay with that.

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Corporate Drumbeat

From MyWebGrocer...

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Study: Ingredients Matter More Than Marketing Claims

Bloomberg reports on a new Nielsen study saying that people increasingly are paying more attention to ingredients and less to marketing claims.

According to the story, "Food purchases are less driven these days by what's written on the front of the box than what's listed as ingredients, said Andrew Mandzy, director of strategic insights at Nielsen. Some consumers aren't even reading so much as they are counting: About 61 percent said that the shorter the ingredients' list, the healthier the product. Many are looking beyond the boxes themselves. In 2014, 48 percent of consumers went online for health information. In 2016, 68 percent did. Use of technology such as calorie-tracking apps is also up, Mandzy said."

Of course, "As consumers pay closer attention to ingredients, they may be getting a little too zealous, avoiding some that are largely harmless," Bloomberg writes. "Sales of products blaring that they are gluten-free are up 11.8 percent over the past five years, and soy-free sales are up 29.8 percent. But health professionals don't recommend that average Americans make a point of cutting out either of these ingredients.

KC's View: I've always argued that we increasingly live in a world where retailers and suppliers need to be more than just a source of product, but also need to be a resource for information ... and these numbers would seem to reinforce that.

I think this is a good thing ... and it also should prompt companies to focus on marketing that is less hype and more fact-based. Because products that do not live up to hype will be seen as having betrayed trust, and no brand can afford to have that happen.

OJ Manufacturer Turns To Millennials In Hope Of Reviving Sales

Go figure. Count orange juice as yet another victim of the nutrition wars in the US. But OJ manufacturers are hoping that they can get millennials to change the way their product is viewed.

The Washington Post had a story the other day about how orange juice, "a onetime breakfast staple," has seen sales decline because of consumer concerns about sugary beverages, which in turn has resulted in reduced shelf space.

According to the story, "PepsiCo, owner of Tropicana, has lined up a marketing campaign to boost the 70-year-old brand with millennials. The beverage giant this month began buying native advertising space with Ashton Kutcher’s A Plus digital news site — which espouses positive news — in hopes of making millennials learn to love its OJ."

The Post goes on to say that "Marion Nestle, a professor of nutrition at New York University, has no problem with Pepsi trying to make an 8-ounce glass  part of millennials’ daily constitutional ... Nestle, who is not known for her soft spot when it comes to Big Beverage, gave the Purchase, N.Y.-based food, snack and beverage company a nod. 'Pepsi has pledged to put real money into advertising its healthier products. Let’s give them credit for doing that in this case'."

KC's View: I know a lot of millennials who like to drink orange juice. But they mix it with prosecco, or vodka, or something else ... and they're usually not thinking about health.

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Corporate Drumbeat

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Corporate Drumbeat

ProLogic Retail Services Extends Shopper Loyalty Program at Lowes Foods

Winston-Salem, NC -- ProLogic Retail Services, the largest provider of loyalty marketing solutions to independent grocers, announced the extension of its contract with Lowes Foods, which operates close to100 full-service supermarkets in North Carolina, South Carolina and Virginia.

Through the Fresh Rewards program, ProLogic enables Lowes Foods to segment its shoppers, identifying its top shoppers and understanding their purchase patterns. With this information, ProLogic enables Lowes Foods to run targeted promotions that are specifically tailored to individual shoppers or groups of shoppers. These targeted promotions help Lowes Foods to retain its best shoppers and expand their purchases throughout the store.

"We are very pleased to extend our longtime partnership with ProLogic," said Tim Lowe, President of Lowes Foods. "ProLogic delivers great value to Lowes Foods with a powerful, flexible loyalty marketing platform that enables us to create and execute intelligent promotions. The Fresh Rewards program is a cornerstone of our relationship with our guests and has proven highly effective in helping us retain our top shoppers and increase their purchases."

For more information, click here. Or contact Lance Recker at lrecker@prologicretail.com or at 561-454-7646.

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Industry Drumbeat

From WAFC...


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Amazon Plots Fleet Of Super Drones, Flying Warehouses

The Seattle Times reported the other day on how Amazon has filed for a parent on a "collective unmanned aerial vehicle" that would have "smaller drones stick together in various configurations. That would allow the super-drone to carry 'virtually any size, weight, or quantity of items, travel longer distances, etc.,' the application reads. The drones can also fly together somewhere and then decouple to make individual deliveries."

Call it a super drone.

The Times writes that "the idea would allow Amazon to field just one type of drone, instead of several types in which each is designed to carry different types of packages or travel at various distances. It’s just another patent from a company that files plenty of them, but it shows how busily Amazon is thinking about the drone delivery program first announced by CEO Jeff Bezos in 2013."

And that's not the only thing that Amazon sees when it looks up at the skies.

The story notes that Amazon also has filed for a patent on "flying warehouses held aloft by blimps ... It would float above a city at 45,000 feet of height, and hold not only thousands of items, but a fleet of drones. Gravity would make the drones more energy efficient, as they wouldn’t have to power up until they’re close to the ground. The drones could make their way back to the mothership in a shuttle, accompanied by packages and workers not afraid of heights. It can move to hover over other cities based on demand."

KC's View: The Times correctly notes that "one can only imagine the jungle of actual technological implementation and regulation such a venture would encounter in order to become reality. So it might remain in the realm of science fiction for a while."

But that's what we were saying about drone delivery not that long ago, and 7-Eleven made 77 drone deliveries in the US last month.

In the immortal words of Jean-Luc Picard, "Everything is impossible, until it is not."

(Though I have to admit that the whole collective drone vehicle thing sounds a lot more like the Borg than I find to be comfortable...)

Worth Reading: Study Shows Differences Between GMI, Non-GMO Corn

An anti-GMO group called Sustainable Pulse is reporting on a new study conducted in the UK and published in the scientific journal Nature - that says "molecular profiles" reveal that there are "major differences in composition between a GMO corn and its non-GMO parent."

The bottom line, the story says, is that "the findings of this study disprove industry and regulatory agency claims" that GMO corn is "substantially equivalent" to its non-GMO equivalent, and "suggest that a more thorough evaluation of the safety of consuming products derived from this GMO corn on a long term basis should be undertaken."

You can read the entire story here.

KC's View: Let's be clear. The folks who did the study, and the folks who are reporting the study, have a point of view. But that doesn't mean they are wrong or inaccurate.

This study is a lot further into the scientific weeds than I'm capable of understanding, but I want to know more.

BTW...just being genetically modified, and being different from non-GMO products, does not make a thing bad. Just different. My argument all along has been that rather than arguing that there is no difference, pro-GMO forces out to be educating and illuminating the public.

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Industry Drumbeat

From Webstop...

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Murder Prosecutors Put Amazon's Alexa On Trial

Add this to the list of issues that most people probably never thought about ... until technology created a new reality.

In Arkansas, a county prosecutor has served Amazon with a search warrant, demanding information from an Echo smart speaker that was owned by a man now suspected of murder.

As reported by CNN, "Benton County Prosecuting Attorney Nathan Smith hopes the voice-activated Echo - which answers users' questions, plays music, reads news and connects to other smart devices - will provide information on how a man came to be found dead in 31-year-old James Bates' hot tub.

"Bates' defense attorney, Kimberly Weber, says there is nothing useful on the device and applauds Amazon for protecting her client's privacy. Bates, who was arrested in February on suspicion of first-degree murder, is presently free on a $350,000 bond. A discovery hearing in his case is scheduled for March."

Amazon is resisting the warrant.

The CNN story says that the debate sets up "another legal battle over investigators' quest for technology-based evidence and American privacy rights ... As technology has become more and more integral to daily life, authorities have increasingly sought evidence from mobile phones, laptops, social media, even the Warcraft video game."

A GeekWire story offers more context:

"Police probably won’t get much from Alexa.  She listens all the time, but only records and transmits conversations after a 'wake word' is issued — usually, 'ALEXA.'  Echo gadgets hear the wake word, then transmit commands back to Amazon for language processing. Those recording are stored by Amazon, and can be viewed and deleted at any time by users (by visiting amazon.com/mycd). Police who heard the recording would probably only obtain a list of boring commands like, 'Tell me the weather' or 'Order me more toilet paper.'
"There is a small possibility that Amazon may know something more, however — and one can see why an enterprising detective would want to bring in Alexa for an 'interview.'

"As Echo users know, Alexa occasionally is awakened by mistake, and rudely shoves her way into conversations. There is a small chance that something useful to police might have been recorded by accident. (The chance is *really* small, because Alexa is trained to block out background noise, which presumably would even include the sound of a gruesome murder).

"There’s an even smaller chance that a suspect might have said out loud, 'Alexa…how do I murder someone in a hot tub?' That’s why this case is probably much ado about nothing."

KC's View: Yikes.

Well, I guess I can add questions about how to commit murder to the list of things that I should not be asking Alexa.

E-conomy Beat

Email Marketing Daily reports that "holiday online sales grew 10.7% year-over-year to $79.2 billion, according to a report from Adobe Digital Insights, and email helped drive as much as a fifth of revenue ... Adobe’s data suggests that email became an increasingly important marketing channel for retail brands as the holidays approached, with email’s share of sales increasing throughout the month of November."

FastNewsBeat

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Hollywood Reporter reports that "Run-D.M.C. has filed a lawsuit against Walmart, Amazon, Jet and a number of others for more than $50 million over alleged trademark infringement on products using the iconic hip-hop group's name and logo without permission." The suit "also names a number of the companies selling the products through those online marketplaces, as well as 20 John Does, saying they 'trade on the goodwill of RUN-DMC'."

The lawsuit says that "some of the allegedly infringing products claim to be 'RUN-DMC styled products' such as fedora hats and square-frame sunglasses that use the group's name in their title or description but not the logo. Meanwhile, others more blatantly use the group's famous logo on shirts, purses, patches and other products."

This is one of the ways in which I know that I'm old. I have no idea what Run-D.M.C.'s logo looks like, nor what clothes or sunglasses they wear.


• The National Association of Convenience Stores (NACS) is out with a year-end study saying that 63 percent of c-store retailers saw an increase in foodservice sales during 2016, with an equal number saying they saw an increase in the sales of better-for-you items like fruits and vegetables, yogurt, nuts and health bars.

The study also says that "retailer confidence about the U.S. economy also surged. A record 79% of retailers say they are optimistic about the U.S. economy—a 26-point jump from last quarter. This surge in retailer optimism mirrors the optimism of their customers. A record 60% of U.S. fuel consumers said they are optimistic about the U.S. economy, according to the NACS December 2016 consumer sentiment survey. Retailers also are very optimistic about the overall convenience retailing industry. More than three in four convenience retailers (78%) said they are optimistic about the industry’s prospects in the first quarter of 2017, a 7-point jump from three months ago."


The Street reports that Costco seems to be signaling that an increase in US warehouse membership fees may be on the table for 2017, following 10 percent fee increases in Taiwan, Korea, Japan, Mexico and the UK.

The story writes that "should Costco lift membership fees in the U.S. and Canada next year, and considering the recent overseas hikes, the company's bottom line could get a needed jolt as sales have slowed at the hands of greater online competition and food deflation."


• The Washington Post reports that "a new law in Michigan will prohibit local governments from banning, regulating or imposing fees on the use of plastic bags and other containers. You read that correctly: It’s not a ban on plastic bags — it’s a ban on banning plastic bags."

The story points out that "Michigan is not the only state to have implemented a ban on bans. Idaho, Arizona and Missouri all have enacted similar laws. In these cases, proponents of the laws have defended them as a way of protecting businesses from having to comply with additional regulations."

As opposed to protecting the planet from pollution. Or, to be specific, allowing municipalities and their citizens from determining what their priorities and policies should be when it comes to such things.


• The Wall Street Journal reports that Sears Holdings CEO Edward Lampert has extended the company a $200 million line of credit that be expanded to a total of $500 million.

The story says that "the company, which had just $258 million in cash on hand as of October, said it would use the new liquidity to fund its operations."

It is amazing to me that at this point Sears doesn't have a DNR. Though at some point in the near future, I suspect that it won't matter.

RIP

• Had MNB been 'live" last week, we inevitably would've paid attention to the deaths, one day apart, of actress Carrie Fisher, who died at age 60, and her mother, Debbie Reynolds, who passed away at 84.

Both, obviously, were legends. They both, ironically, made the films for which they probably were most famous at age 19.

Put away the Star Wars films for a second. Two of my favorite Fisher performances include her first - as a precocious (to say the least) teenager in Shampoo, written by Robert Towne and directed by Hal Ashby - and her one-woman show, "Wishful Drinking," which was an HBO special just a few years ago. (It was based on one of her books, which was a typically funny, take-no-prisoners, skillfully crafted piece of work.)

As for Reynolds ... if there's a heaven and she's knocking on the pearly gates, it seems to me that all she'd need for admission is a single song from the first movie in which she starred, Singin' In The Rain - "Good Morning." Has there ever been a brighter, happier song in a Hollywood movie? (It is ever more impressive that she didn't dance before Singin' In The Rain, and essentially was taught for the movie by her co-star, Gene Kelly.)


• The other death of note in the cultural arena was that of William Christopher, who played Father Mulcahy on "M*A*S*H" from 1972 to 1983, serving as a soft-spoken foil for the rambunctious surgeons played by Alan Alda, Wayne Rogers and Mike Farrell. He was 84 and had been battling cancer.

Sansolo Speaks

...will be posted tomorrow.

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Industry Drumbeat

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Your Views: World Views

Before we went off on vacation, we were having a debate here about the appropriateness of on-call labor scheduling, which allows employers to force employees to remain on-call without being paid ... which I think is both unfair and lazy management.

MNB reader Claire Tenscher chimed in:

I’m once again feeling compelled to offer a counterpoint. Here, to the reader who discusses the on-call scheduling his daughter experienced. In the case of the writer’s daughter it didn’t sound like she had dependents, but what if she was required to be on-call when she also needed to be in class? She was fortunate enough to get a job whose on-call hours worked for her. Many of the people working in jobs with mandatory on-call don’t have a choice of where to work. Employers are not competing for their labor.

On-call scheduling is more difficult for groups of people that hold multiple jobs or have children that require care. It is too common for writers/commenters here and elsewhere to walk only in their own shoes. On-call scheduling is a benefit for certain groups that causes hardship to others. Sometimes we must give something up to improve the lives of those less fortunate than ourselves.


MNB reader Tom Herman wrote:

I think that we have a very different world view. In a sense, you may see employers having all the power and employees having very little. Times have a changed my friend and millennials see it very differently. They don't see employers as the oppressors and themselves as the victims. They are more empowered and are creating a workplace environment that pushes employers to compete in the marketplace for people. The marketplace is changing for companies, consumers and employees. In this shift, both consumers and employees are being empowered with more influence and clout. Information is power.




On another subject, from MNB reader Rich Heiland:

You have written often about delivery so I thought I would check in from the Polanco district of Mexico City where we are spending Christmas with our daughter, who works at the US Embassy here, and her family.

Last night we had almost all the fixings for Christmas dinner delivered by two teams of young people – one from Selecto Chedraui (a huge Mexican superstore along the lines of a super Walmart) and Costco. Both teams of delivery folks were young, clean cut, smiling and professional and didn't mind carrying a load of stuff up three flights to the apartment. The teams, by the way, were independent contractors, not employees. 

We may eat in one night and if we do, it will be from a place that uses UberE. One call, one charge and an on-time, professional delivery.

 At 70 years old I have to admit I have raised an eyebrow at the whole delivery concept, maybe with a bit of “kids these days” grumpiness. But I have to tell you, it’s pretty cool. I think I am a convert.





On the subject of millennials' work habits, one reader wrote:

As a younger Millennial myself, I immediately saw and re-shared the Boston Globe article as it was circulating social media this week. The article mentions Millennials being “racked with guilt if they take time off.” Yesterday I was at a sporting event with a group of my peers. My friend mentioned that she wants to take a week-long vacation with her family to Greece in the new year. “How do I ask my boss?” she asked us. She said she has never taken off more than 1-2 days in a row before, and that she felt terrible for even considering such a lengthy vacation. We then spent approximately 10 minutes drafting and rewriting her request for time off so that it had appropriate levels of politeness, firmness and apology, and she solicited feedback on when the best time-of-day was to approach her manager.

For the record, I have wonderful working relationships with my Gen X and Boomer coworkers. We joke about generational differences (“I know you would prefer a text, but can we chat about this over the phone?”), and the office Millennials are happy to serve as the unofficial experts of all things trendy and technological.


And, from MNB reader Mark Boyer:

We must remember that those giving Millennials a bad rap also likely raised them.

Very true.




And speaking of generational issues, one MNB reader had a reaction to something I wrote pre-vacation:

You really dated yourself with that Jimmy Durante reference! Would love to know how many of your readers will be Googling today to find out who he was.

Good night, Mrs. Calabash, wherever you are.

PWS 51